How can I finance the purchase of my car?
It’s important for someone who runs a business to be mobile. That’s why a car is often an essential asset. Fortunately, when it comes to car finance, there are lots of different options to choose from, each one with its own benefits. We’ve briefly explained them below.
Financial leasing
How does it work?
Financial car leasing is a method of financing vehicles based on a three-way relationship between the lessee, the lessor and the supplier of the vehicle.
- The leasing company buys a car on your behalf from a supplier of your choice.
- You enter into a lease agreement with the company for a given period during which you will use the car. Under the agreement, you make monthly lease payments.
- During the term of the lease agreement you are the economic owner of the vehicle, which means it is recorded on the assets side of your balance sheet.
- At the end of the agreement you have the option of purchasing the car. With leasing, the standard residual value is equal to 4% of the purchase amount.
If you’d like an all-in formula with no operational or administrative worries for a fixed monthly lease payment, a Full-service vehicle leasing contract is the perfect choice.
What are the benefits?
- You don’t have to pay anything upfront: the leasing company pays the full amount of the investment (including VAT) to the supplier.
- You pay the VAT in instalments every time you receive a leasing invoice: this way, you avoid an additional financial burden at the time of the investment.
- You don’t have to put up any collateral: this means you can use your collateral to secure other business loans, thus enabling you to finance other investments.
Financial renting
How does it work?
Financial renting is also a method of financing vehicles based on a three-way relationship between the lessee, the lessor and the supplier of the vehicle.
- The leasing company buys a car on your behalf from a supplier of your choice.
- You enter into a rental agreement with the company for a given period during which you will use the vehicle. Under the agreement, you make monthly rental payments.
- You record the rental invoices as expenses in the income statement. The vehicle is, therefore, not entered on your balance sheet and does not have an adverse impact on the balance sheet total.
- At the end of the agreement you have the option of purchasing the car. With renting, the standard residual value is equal to 16% of the purchase amount.
What are the benefits?
- You don’t have to pay anything upfront: the leasing company pays the full amount of the investment (including VAT) to the supplier.
- You pay the VAT in instalments every time you receive an invoice: this way, you avoid an additional financial burden at the time of the investment.
- You don’t have to put up any collateral: this means you can use your collateral to secure other business loans, thus enabling you to finance other investments.
Investment credit
How does it work?
An investment credit is a loan taken out by your company to purchase a company car. KBC makes the money available and the car becomes the full property of your company. You then pay off the loan each month at a fixed rate of interest.
- You choose the car.
- You provide us with the quote or order form and let us know how much you want to borrow.
- KBC conducts a credit check and informs you if the loan is approve not.
- You enter into a credit contract with KBC and pay off the loan each month.
What are the benefits?
- You decide whether to draw down your investment credit in instalments or in one go.
- You can draw down your credit online using %product.mobilebanking%%, %%product.touch%% or the Business Dashboard.
- The minimum credit amount is lower than for leasing or renting.
Full-service vehicle leasing
How does it work?
Full-service vehicle leasing from KBC is an agreement between your company and KBC through which we finance not only your car, but also all associated costs such as insurance, maintenance and repairs.
- You don’t have to pay anything upfront: KBC pays the full amount of the investment (including VAT) to the supplier.
- You pay the same fixed amount each month. This covers repayment of the purchase amount, VAT and additional costs such as maintenance, tax and insurance, so you can hit the road worry-free.
- You don’t have to put up any collateral. This means you can use your collateral to secure other business loans, thus enabling you to finance other investments.
What are the benefits?
- You make a fixed monthly lease payment that covers everything (finance, insurance, maintenance, repairs, etc.).
- You record the leasing invoices as expenses in the income statement. The vehicle is, therefore, not entered on your balance sheet and does not have an adverse impact on the balance sheet total.
- You don’t have to pay anything upfront.
- You have no unexpected costs.
- You avoid administrative hassle. The leasing company takes care of all the formalities involved in buying and maintaining the car.
